Bailout may fail, say Tucker

Wednesday 21 January 2009 14:35 BST

Bank of England rate-setter Paul Tucker today admitted the latest bailout of the banking sector by the Government may fail. Tucker, appearing before the Commons Treasury Select Committee, added that this week's slump in banking stocks risks overshadowing the rescue package.

"It hasn't been an entirely comfortable few days," conceded Tucker, who replaces the Bank's Deputy Governor, Sir John Gieve, in March. "I think it has a reasonable chance," he said of the plans. "There are no silver bullets, but I think it's a good package. It's not absolutely guaranteed to succeed."

The Government announced on Monday, just three months after its first £500 million bailout, that it would insure banks against losses from risky assets in a bid to kick-start lending.